Journal

Making Tax Digital for Sole Traders and Landlords: Which Records to Keep Each Quarter

Understanding Making Tax Digital (MTD)

Making Tax Digital (MTD) is a government initiative aimed at making tax easier for taxpayers. It involves using digital tools to record and submit certain tax information electronically. For sole traders and landlords, the process involves keeping specific records and submitting them quarterly. This guide will help you understand which records you need to keep each quarter to comply with MTD.

Key Records for Sole Traders

Records to Keep Each Quarter

Income Records: Keep a record of all sources of income, including self-employment income. For example, if you earn £5,000 from renting out property, you should record this income.
Expenses Records: Keep receipts and records for any expenses incurred during the quarter. For instance, if you spent £300 on office supplies for your online business, keep the receipt. Expenses related to your home office or rental property fall under this category as well.
Expenses Deductions: If you can claim expenses, keep detailed records of them, including the dates, amounts, and how they relate to your business.
Income and Expenses Summary: At the end of the quarter, summarize all income and expenses for self-employment. This summary helps you calculate your tax liability.

Practical Steps for Keeping Records

Use Digital Tools: Utilize digital tools and software designed for MTD to track and record your income and expenses.
Regularly Review: Regularly review your records to ensure accuracy and completeness. Check for any omissions or errors.
Keep Records Safe: Store your records securely, either electronically or in a safe place, to maintain the integrity of your data.

Key Records for Landlords

Records to Keep Each Quarter

Rental Income Records: Record all rental income, including any additional income from ancillary services like repairs or maintenance. For example, if you earn £1,000 from renting out a property, include this income.
Expenses Records: Keep records for all expenses related to your rental property, including mortgage payments, insurance, maintenance, and repairs. Include receipts and invoices.
Expenses Deductions: Claim all eligible expenses, such as mortgage interest, council tax, and legal fees. Keep receipts and invoices for these expenses.
Income and Expenses Summary: Summarize your rental income and expenses to calculate your tax liability. This summary can help you understand where your money is going and ensure you're not missing any deductions.

Practical Steps for Keeping Records

Use Digital Tools: Utilize digital tools and software specifically designed for MTD to track and record your rental income and expenses.
Regularly Review: Regularly review your records to ensure accuracy and completeness. Check for any omissions or errors.
Keep Records Safe: Store your records securely, either electronically or in a safe place, to maintain the integrity of your data.

Importance of Keeping Records

Keeping accurate and up-to-date records is crucial for compliance with MTD. It ensures you pay the right amount of tax and helps you avoid penalties. By keeping detailed records of your income and expenses, you can accurately calculate your tax liability and ensure compliance.

Links to Relevant Resources

Conclusion

By understanding the key records you need to keep each quarter and following the practical steps outlined, you can ensure compliance with MTD for your self-employment and rental property activities. For more detailed information and resources, visit HMRC’s Making Tax Digital pages.

---

Note: This article provides an overview of the key records for MTD. It's advisable to consult HMRC's official guidance for the most comprehensive and up-to-date information.

Looking for ready-made templates and printables? Browse the shop.

Stay in the loop.

New templates and member-only offers, now and then. No spam. Unsubscribe in one click.